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Bellatrix Exploration Ltd. completes recapitalization transaction

Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) (TSX: BXE), a publicly traded Canadian oil and natural gas company engaged in exploration for, and the acquisition, development and production of, oil and natural gas reserves, completed on June 4, 2019 a recapitalization transaction (the “Recapitalization Transaction”) pursuant to a court-approved plan of arrangement (the “CBCA Plan”) under the Canada Business Corporations Act (the “ CBCA” ).

The Recapitalization Transaction resulted in, among other things, (i) the exchange of the Company’s previously outstanding senior unsecured notes due in 2020 in the aggregate principal amount of approximately US$145.8 million, plus all accrued and unpaid interest, for a combination of US$50 million of new second lien notes due in September 2023, approximately US$54.8 million of new third lien notes due in December 2023, and new common shares of Bellatrix representing approximately 51% of the Company’s issued and outstanding common shares immediately following implementation of the Recapitalization Transaction, and (ii) the exchange of the Company’s previously outstanding convertible debentures due in 2021 in the aggregate principal amount of CA$50 million, plus all accrued and unpaid interest, for new common shares of Bellatrix representing approximately 32.5% of the Company’s issued and outstanding common shares immediately following implementation of the Recapitalization Transaction.

The Recapitalization Transaction reduced Bellatrix’s outstanding indebtedness by approximately CA$110 million, reduced annual cash interest payments by more than CA$12 million annually until Dec. 31, 2021, and addressed certain of the Company’s debt maturities such that Bellatrix no longer has any debt maturities in respect of non-revolving debt prior to 2023. In connection with the Recapitalization Transaction, the Company also obtained a one-year extension of its revolving period under its bank facility until May 30, 2020.

Bellatrix announced the Recapitalization Transaction on March 29, 2019, with the support of holders of approximately 90% of the Company’s senior unsecured notes and holders of a majority of the Company’s convertible debentures, who had entered into support agreements with the Company pursuant to which they agreed to support the Recapitalization Transaction and vote in favour of the CBCA Plan.

On April 16, 2019, the Company commenced proceedings under the CBCA and obtained an interim order from the Ontario Superior Court of Justice (Commercial List) (the “Court”) authorizing, among other things, the calling and holding of meetings of affected security holders to consider and vote on the CBCA Plan pursuant to which the Recapitalization Transaction would be implemented.

The CBCA Plan was approved by the Company’s senior unsecured noteholders, convertible debenture holders and shareholders at meetings held on May 23, 2019, with 100% of the votes cast by senior unsecured noteholders, approximately 99.5% of the votes cast by convertible debenture holders and approximately 87.2% of the votes cast by shareholders voted in favour of the CBCA Plan. On May 28, 2019, Bellatrix obtained a final court order from the Court approving the CBCA Plan. The Recapitalization Transaction completed on June 4, 2019 resulted in an improved capital structure for the Company, with reduced debt levels, reduced annual cash interest payments and extended debt maturities, providing Bellatrix with a stronger financial foundation.

Bellatrix’s in-house counsel is Charles R. Kraus (Executive Vice-President, General Counsel and Corporate Secretary). Goodmans LLP represented Bellatrix in Canada with a team comprised of Robert J. Chadwick, Caroline Descours and Andrew Harmes (Restructuring), Tim Heeney and David CollBlack (Corporate/Securities), Dan Dedic and Danielle Knight (Banking), and Carrie Smit and Chris Baxter (Tax). Vinson & Elkins LLP represented Bellatrix in the United States with a team led by Robert L. Kimball, Shelley A. Barber, Brenda Lenahan, Chris Mathiesen, David Choi and K. Stancell Haigwood (Corporate/Securities), David W. Wicklund, Michael E. Bielby Jr., Collin Z. Groebe and Frank George (Banking), and Wendy Trahan Salinas (Tax) . Burnet Duckworth & Palmer LLP represented the special committee of the board of directors of Bellatrix, with a team comprised of Edward Brown, Bronwyn Inkster and Paul Mereau (Corporate/Securities), and Kathy L. Pybus and Riley O’Brien (Banking).

Bennett Jones LLPrepresented the Initial Consenting Noteholders in Canada with a team that included Kevin Zych and Michael Shakra (Restructuring), Kristopher Hanc (Corporate/Securities), Mark Rasile (Banking) and Darcy Moch (Tax).

Stikeman Elliott LLP represented the Second Lien Noteholders in Canada with a team that included Guy P. Martel and Nathalie Nouvet (Restructuring), and Michael L. Dyck and Serge Levy (Banking). Kirkland & Ellis LLP represented the Second Lien Noteholders in the United States with a team that included Mary Kogut Brawley, Laura Bielinski and Mahalia S. Burford (Banking), and Julien J. Seiguer, Bryan D. Flannery, Christopher J. Fox and Andrew L. Lombardo (Corporate/Securities).

Blake, Cassels & Graydon LLPrepresented National Bank of Canada as the First Lien Agent with a team that included Kelly Bourassa and James Reid (Restructuring), Olga Kary (Corporate/Securities), and Warren B. Nishimura and Cameron Siempelkamp (Banking).

U.S. Bank National Association, in its capacity as indenture trustee to the senior unsecured noteholders, was represented in Canada by Michael J. Hanlon and Jeffrey Levine of McMillan LLP, and in the U.S. by Kathleen M. LaManna and Ira H. Goldman of Shipman & Goodwin LLP.